Mortgage rates continue to drop to historic lows as the housing industry makes its slow crawl towards a rebound.
For the second consecutive week, the 30-year fixed rate average fell from 3.84 to 3.83 percent according to Freddie Mac. This is quite the drop considering that last year the average stood at 4.63 percent. It is also the lowest recorded rate since 1950 when long-term mortgages began.
The 15-year average mortgage rate declined as well from a record 3.07 percent last week to 3.05 percent this week. By comparison, last year the 15-year average was 3.82 percent.
These low rates have enabled Chicago home buyers with a great incentive to purchase property, if they can qualify due to tighter lending standards. This is also a reason, despite the low rates, home sales have continued to remain sluggish overall. Other obstacles in the way of taking advantage of these record low mortgage rates include high down payments required by banks and the fact that one in five homeowners owe more than their property is worth.
“Following April’s weaker than expected employment report, and the French and Greek election results raising concerns over the stability of the Euro currency zone, long-term Treasury bond yields declined allowing fixed mortgage rates to ease to new all-time record lows this week,”said Frank Nothaft, Freddie Mac’s vice president and chief economist.
Despite the lull in home sales, there is good news to share:
- Builders are planning to break more ground for new homes than at any point in the past 3 1/2 years.
- Homes that were previously occupied saw there best sales in five years this past winter.
Do our Chicago area readers see the low mortgage rates as making a dent in the current housing climate? Why or why not? Please leave your comments.